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Stretching the Limits of the FCPA

It is important to shine the light on government actions.  The Justice Department’s record on FCPA enforcement is one area where sunlight is desperately needed.

The FCPA applies to payments of money or any other thing of value to foreign officials with corrupt intent.  The FCPA does not apply to payments of money or any other things of value to private individuals with corrupt intent.  This is a basic distinction in the FCPA — foreign officials and private individuals.

The UK Bribery Act does not make that distinction and bars prohibited payments to both public officials and private parties.

The Justice Department has circumvented this distinction in the FCPA.

For example, the Justice Department prosecuted improper payments to individuals and entities other than “foreign officials.” In the Schnitzer Steel and related settlements, DOJ asserted violations of the FCPA based on payments to employees of private steel mills in China and South Korea and claiming that Schnitzer violated the FCPA by failing to properly account for and disclose the bribes in its internal records and filings.

Similarly, in the Oil-for-Food prosecutions, the Justice Department alleged improper payments made to government accounts rather than to foreign officials.   This same policy was followed in prosecutions involving payments to doctors employed by both public and private hospitals.

More recently, the Control Components’ prosecutions coupled FCPA charges with charges that the company violated the Travel Act by making corrupt payments to private entities, both in the United States and abroad, in violation of California state law against commercial bribery.

The DOJ prosecuted Alcatel- Lucent for, among other violations, an improper payment made to a former government official, a former Nigerian Ambassador to the United Nations for the purpose of arranging
meetings with a government official. The DOJ did not pursue an FCPA anti-bribery charge, but the company was penalized for not keeping accurate books and records.

Finally, the DOJ has used aiding and abetting concepts under 18 USC Section 2 to prosecute companies which it would otherwise have no jurisdiction over. 

All of these practices need to be examined.  Was this really the intent of the legislators when passing the FCPA and amending it in 1998?

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